Trump's tariff policy causes the dollar to fall - Europe on the rise!

Trump's tariff policy causes the dollar to fall - Europe on the rise!

Donald Trump's policies have not only significantly influenced the inner workings of the US economy in recent years, but have also had far-reaching effects on the global economy. The development of the US dollar, which is considered the key world reserve currency, is of particular concern. Loud RP Online the Trump administration has reduced trust in the US economy and the rule of law. These developments have not been without negative consequences for international economic activity.

The US dollar traditionally benefits from the size of the US economy and confidence in the institutional framework. In fact, over 50% of global central bank reserves are held in US dollars, primarily in the form of US government bonds. But the Trump administration's policies are leading to an outflow of capital from investors, rising interest payments on government bonds and falling securities prices. There is also discussion that the Trump administration may pressure foreign creditors to swap their U.S. Treasury bonds for long-term, lower-yielding bonds, which could lead to a further loss of confidence.

The consequences of tariff policy for the dollar

Trump's aggressive tariff policies, seen as a means to reduce the US trade deficit, have provoked significantly negative reactions. The dollar has failed to recover relative to stock markets, falling to levels not seen since 2022, they report daily news. Investors are increasingly fleeing into alternative currencies such as the euro, yen and Swiss franc. Against the background of an impending economic downturn in the USA, futures traders are even expecting four key interest rate cuts within the coming year.

Of particular concern is the possibility that the dollar could lose its role as the world's reserve currency. If the US economy were to slip into recession, this would have serious implications for the refinancing of the US national debt, which is already at $37 trillion. A sudden collapse of the dollar would result in massive losses of wealth for US companies and consumers.

Europe's opportunity to strengthen the euro

Amid these uncertainties, Europe has an opportunity to reduce its dependence on the US and promote the euro's role as a global currency. Proposals to strengthen the euro include faster implementation of a capital markets union and the introduction of a common European security that could be specifically designed for defense and infrastructure projects. Such a development could significantly strengthen the position of the euro and reduce its dependence on the US dollar.

Experts continue to closely monitor the ongoing uncertainty surrounding Donald Trump's economic policies and the global economic situation. It remains to be seen how the situation will develop and what steps Europe will take to prepare for the challenges of the coming years.